How online retailers can lower shipping costs and boost efficiency

When logistics and e-commerce decision makers are asked what they are planning for the coming months, many cite lowering costs as their top priority. But how can they achieve this goal?

Five steps to saving shipping costs

In e-commerce, shipping presents a good opportunity to streamline and optimize processes, and save money along the way. The following five tips illustrate how that looks in practice and what to pay attention to along the way.

1. Opt for a single delivery partner rather than multiple contacts

The coronavirus pandemic has created massive challenges, including unexpected spikes in orders, slackening demand and bottlenecks. And borders and logistics centers could shut down at any time.

To become more flexible, independent and responsive – and thereby reduce costs – it’s a good idea to find an experienced shipping partner that offers multiple delivery providers per country, handles all logistics processes and bundles shipping volumes. End-to-end management from a single source streamlines shipping processes. If everything is organized from a central partner – from pick-up at the warehouse to last mile delivery in different countries – it minimizes complexity and saves money.

When the going gets tough and hubs close or carriers are overloaded, it’s also good if online retailers are able to bring in a new logistics provider quickly rather than having to wait to get a new carrier on board, otherwise they lose a lot of money. It’s both highly useful and cost-effective to manage logistics processes centrally through a logistics platform.

E-tailers working with fewer contacts can benefit from having less work and more support from a single source. This includes selecting the right carrier for the target market and country in question, creating labels, returns and end-to-end tracking.

2. Select the right local carrier for every package

There are more than 100 shipping service providers in Europe, all specializingin particular services and regions. For greater flexibly and cost-savings, use a delivery platform that offers a single connection to multiple local specialists. An optimal carrier mix can reduce shipping costs by up to 30%.

Access to all European carrier networks also makes it easier to get started in new countries. The most suitable cost-effective shipping partner for the country and target group can always be selected – instead of having to rely on a large international carrier due to a lack of options.

Direct injection into the local delivery provider network also saves online retailers up to 35% on delivery times – including for returns. Packages are fed directly into the local networks, from the warehouse directly to the hubs of the delivery providers in the destination country. This allows significant acceleration of shipping processes and reduces costs, giving e-tailers access to the best carriers for the respective region or the desired service.

3. Improved communication lowers costs

Transparent customer communication, such as notifications with tracking information, reduces customer queries by up to 26% and lightens the load on customer service. Continuous communication and notifications are important in order to avoid costs resulting from a lack of transparency, complaints and other issues.

Instead, retailers and their logistics managers should opt for fully automatic notifications based on pre-defined delivery events such as “first hub scan” or “delivered”. Customers can be proactively and automatically notified of the status of their orders throughout the entire shipping process.

Another tip is seamless and simple return processes – again supported by up-to-date and direct customer communication. A return portal can be optimally integrated into a shop in different languages – enabling customers to return goods quickly and smoothly. Customers download the return label in just a few clicks before bringing them to a drop-off point.

4. Data insights and analyses for greater competitiveness

A study by the consultancy PwC found that digital champions are significantly better at responding to new requirements, and so thus act with greater flexibility. Smart data analysis is therefore essential. All important documents, from contracts to invoices, must be managed in a central location.

Centralized data storage makes it easier to keep an eye on KPIs, check invoices and analyze relevant contractual parameters. Integrated analytical tools also enable all shipments to be displayed in a single overview. User-defined dashboards and reports – for instance, an analysis of carrier performance in terms of delivery times and rates – support data-driven decision making.

And that’s not all: the route and history of every delivery can be tracked via search engine and provided to customer service. Such information enhances the ability to provide information to customers and provides the basis for optimal, cost-effective decisions. 

5. Don’t forget claims and insurance!

Another aspect of cost and time-intensive logistics work is claims and insurance. To minimize effort and costs, it’s a good idea to insure packages up to a certain purchase value for the duration of the shipping process. Using a third-party for claims, as part of an overall service package, ensures simplified processing of refunds for damaged packages. Standardized damage forms create transparency and uniform processes. And in the end, less work means lower costs. And a clearer overview generates additional savings potential.